InsiderOnline Blog: November 2012

France’s socialist government, presiding over an economic shambles, is seriously considering a competitiveness program, parts of which could have been written by a free market think tank. Liz Peek reports:

Earlier this week, the Hollande government announced it would cut payroll taxes for businesses to overcome what Prime Minister Ayrault described as “ten years of industrial stagnation.”

The move was in response to a government-sponsored report just out on how to stem the country’s competitive decline.It was something of a surprise coming from a group whose first instinct was to slap a 75 percent marginal income tax rate on high earners. The paper, authored by Louis Gallois, former CEO of European Aeronautic Defense & Space Companie, recommends 22 measures to “stop the slide” and deliver what is described as a “competitiveness shock.” […]

Gallois’ includes the just-enacted reduction in the portion of the state’s welfare cost burden borne by industry as well as a slew of other measures. They include avoiding “new layers of regulation” to “ensure better long-term visibility,” helping small businesses, reducing “legal and fiscal obstacles for small firms seeking to grow into mid-sized companies, simplifying export credits and maintaining tax credits and public funding for research and innovation. He also recommends putting four workers on the boards of large companies, to try to soften France’s “us vs. them” labor mentality.

Most shocking perhaps is the suggestion that France would do well to research exploring possible shale gas reserves that are among the largest in Western Europe “despite environmental concerns.” [Fiscal Times, November 7]